A Quick Primer: Understanding Ariba's (Standard) Sourcing Services

As a veteran of FreeMarkets' early market making organization -- which relied on hard work, ingenuity, and more brains than brawn -- I found it fascinating to see how Ariba's sourcing services group has created a much expanded set of defined offerings, supported by a shared services organization designed from the ground up for productivity and efficiency. This is a huge shift from the FullSource offering which basically came in one flavor during the vendor's earlier years. During yesterday’s analyst day, Ariba described how it has create a set of standard services based initiatives (in addition to a broader set of generalist sourcing consulting services such as commodity hedging strategy development which I will discuss in a future post).

These standardized services capabilities include initiative-based offerings such as low cost country sourcing, supplier diversity, total cost modeling, supplier performance management, sub-tier sourcing, demand management. But they also wrap in project based initiative including project management, supplier management, RFX creation, data management, supplier identification, event management, supplier transitioning as well as program-based initiatives such as sourcing program design and management, sourcing process mapping, capability building and change management, project pipeline building.

As an example of these standardized sourcing services in action, Ariba gave a number of reference examples that break the "FullSource Mold". Kohl's, a large retailer, which has used Ariba for operational support during peak times of the year to help build sourcing events and train and work with global suppliers. Ariba also cited the case of Ames / True Temper, who engaged Ariba's sourcing services group to train its buyers, transferring sourcing skills and knowledge to its internal procurement organization.

Clearly, this is not the FreeMarkets organization that I grew up in. Gone are the cowboys and pioneering intellects (and a significant portion of the old brain and commodity trust as well). However, this last point is open to debate. I saw significant evidence of deep commodity expertise in Pittsburgh, but at the same time I also know a lot of experts who have left over the years as well (many of whom Ariba would like to get back). But in my view based on yesterday, certainly no one touches Ariba's broad direct materials domain knowledge in the sourcing services arena, even if they have needed to hire folks to replace some of the old faces. I know this last point will generate some controversy will my fellow alums, but let's have at it in the comment section. So, fellow alumni (and current staff): has the category knowledge declined or held steady from a human capital perspective?

Jason Busch

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